Nomad raises another US$ 32 million to hit one million accounts abroad
If the next stage of Brazilian financial competition is in the international market, Nomad has already crossed the border. The fintech, which was created as a dollar bank account for Brazilians and expanded the platform for investments, has just raised $32 million in an extension of its Series A round. Last July, the startup had raised $20 million.
“Like every startup, we had to validate our value proposition and I believe that, in these first 18 months of operation, we achieved that. We offer a way for Brazilians to protect themselves from currency volatility, which has historically been a problem”, says Lucas Vargas, the CEO and partner of Nomad, who made his career ahead of the Zap group. “We are a free digital platform for Brazilians, made by Brazilians.”
With the new investment, the startup has just reached a valuation of BRL 1 billion in a year and a half of operation – the company’s incorporation began in 2019, but the accounts began to roll later. This time, the investment was led by Stripes, a manager based in Manhattan and US$ 7.6 billion under management.
Stripes is focused on consumer and software investments and has companies such as the e-learning platform Udemy, the famous pet food brand Stella & Chewy’s and the crowdfunding platform GoFundMe in its portfolio. VC founder Ken Fox also created Nasdaq-listed Internet Capital Group and manager A10 Capital.
Investors who were already on the Nomad cap table, such as Monashees and Spark Capital (which has Twitter, Slack, Coinbase in its portfolio), Globo Ventures, Propel and Abstract are also following the round. In all, the fintech has already raised the equivalent of BRL 300 million since the app’s launch in November 2020.
The company designed by Patrick Sigrist, one of the founders of iFood, Marcos Nader and Eduardo Haber, was born with the aim of democratizing access to international banking services for Brazilians, a market until then dominated by local private banking. Initially, the operation was aimed only at the US, but today it is possible to use the service in more than 50 countries.
“As soon as I left iFood, I moved to California and felt the need to have a dollar account, to start investing. It was very complicated to access credit, make a card, it was even difficult to send money here”, recalls Sigrist. When I came back and went to work at Neon I had this idea of democratizing access. It was a super challenge, nobody was looking at it.”
Banking services include checking accounts, credit and debit cards, currency exchange and ATM withdrawals in the United States and countries in Europe and Latin America. Funding comes at a good time: Nomad wants to sustain growth from the current 300,000 customers to the goal of one million users by the end of the year.
The brand was only projected for the end of 2023, but as the pace of customer adhesion increased, Nomad accelerated the pace and thinks it hits the number sooner. It is an ambitious number, considering that the largest in this market today, fintech Avenue, has 600,000 customers and that competition is expected to increase – two weeks ago, XP announced the launch of its international retail account, focused on investments, and the startup Passfolio also disputes its share in this segment.
“Competition is always healthy for everyone. This makes us force ourselves to have a better product and service. We are focused on banking, with a wider audience and we only work with hard currency”, evaluates Sigrist. “XP is forced to offer services abroad, but the margin of this type of investment is small and these players work much more with their own products and aiming at greater profitability. We have this more democratic footprint, of giving access.”
Fintechs attract Brazilians to the international banking service by making the exchange in commercial dollars and with IOF of 1.1% on remittances to bank accounts and 0.38% to the investment account, while international expenses made with a local credit card have an incidence of 6.38% of IOF.
In the business structure, Nomad has a partnership with Evolve Bank & Trust and the broker Drive Wealth and the cards are MasterCard branded. As part of its growth, fintech went from 40 to 250 employees in a year and a half, and should add 50 more people to the team by next month.
Source: Value Pipeline